What is allocation?

When creating Product Carbon Footprints (PCFs), you often need to figure out how much of your facility's emissions should be assigned to each product. This process is called "allocation" and it's essential for accurate PCFs.

In this section, you'll learn:

• How to divide emissions fairly and methodologically between different products
• Which allocation method to use for your situation
• How to prepare your data for M2030

Why this is relevant: Many facilities produce multiple products using shared resources. Understanding how to divide emissions helps you create accurate PCFs for each product.

Understanding allocation

Think of allocation like dividing a restaurant bill between friends. If you share appetizers but order different main courses, you need a fair way to split the total. With emissions, it's similar – you need to decide how to divide facility-wide emissions (like energy use) between different products.

Of course, this is a simplified comparison. There are multiple allocation methods and rules depending on the standard being followed. Allocation rules differ between standards because they have different goals. By default, if you are building PCFs in M2030, then you are following the PACT Methodology.

Overall, allocation is important to avoid double counting; ensure PCFs are comparable, and to meet data quality requirements.

When a manufacturing process creates multiple sellable products, we call these co-products. For example, when refining crude oil, you get co-products like gasoline, diesel, and kerosene. Each co-product also needs its fair share of the total emissions from the refining process. Allocation rules ensure emissions are only assigned to the co-product and not the waste.

You might need to use allocation rules when:

• Your facility makes multiple products on the same production line.
• You can't separate energy use between different products.
• You have facility-wide data but need product-specific emissions.

Here are two ways to divide emissions:

1. By physical properties (like mass)
   1. Best for similar products with similar values.
   2. Example: If Product A is 70% of your production volume, it gets 70% of emissions assigned to it.
      
      
2. By economic value
   1. Best when products have very different values.
   2. Example: Precious metals vs by-products.

PACT methodology rules

You can use PACT’s decision tree (as pictured) to work out which approach to follow. Follow these steps in order:

• Let's say your facility has a process that produces four outputs:
  
  

  Co-Product A	Co-Product B	Co-Product C	Co-Product D
  10kg produced	6kg produced	3kg produced	4kg produced
  Sells for $100/kg	Sells for $35/kg	No economic value (waste product)	Sells for $25/kg
  Total value = $1,000	Total value = $210	Total value = $0	Total value = $100

  Step 1: Remove waste products 

  • Product C has no economic value, so it is waste
  • Remove it from your calculations
  • Only allocate between Products A, B, and D

  Step 2: Check the value ratio

  

  To calculate the ratio between products:

  1. Find your highest value per kg (Product A = $100/kg)
  2. Find your lowest value per kg (Product D = $25/kg)
  3. Divide highest by lowest: $100 ÷ $25 = 4
  4. This gives you a ratio of 4:1

  Since 4:1 is less than 5:1, use mass allocation for your calculations.
  Step 3: Calculate mass percentages
  - Total sellable mass = 20kg (A + B + D)
  - Product A: 10kg ÷ 20kg = 50%
  - Product B: 6kg ÷ 20kg = 30%
  - Product D: 4kg ÷ 20kg = 20%

  Step 4: Apply to facility data

  If your facility used 100,000 kWh of electricity: 

  • Product A: 50,000 kWh
  • Product B: 30,000 kWh
  • Product D: 20,000 kWh

   

Preparing data for M2030

Currently, you'll need to do your allocation calculations before entering data into M2030. Here's what to do:

Follow the PACT decision tree

1. Use the tree shown above to determine your allocation method
2. Document which approach you're using (mass or economic)
3. Make sure you've considered if allocation can be avoided first

Calculate your allocations

1. Follow the steps in the example above
2. Do this for all shared resources (energy, materials, and so on)
3. Keep your calculations documented for future reference

Enter only allocated amounts 

1. 1. Input the already-divided numbers into M2030
   2. Example: If Product A gets 50% of emissions, enter 50% of your energy use

Important: Once you've created a PCF, you can't adjust the allocation. Make sure your calculations are correct before entering data.

Need help with calculations?

• Use the example above as a template.
• Drop a message to support@manufacture2030.com if you need more guidance.
• Watch out for new tools we’re creating to help with these calculations. We’ll keep you updated on these in our monthly product newsletter.

Frequently asked questions

• You can still use allocation rules with facility-level data. Here's how:
  
  1. Calculate your product's share
  
  (a) Find total facility production (such as 1,000 tonnes per year).
  (b) Calculate your product's percentage (such as Product A = 100 tonnes = 10%).
  (c) Use this percentage to estimate your product's share of facility inputs.
  (d) Example: If your facility uses 1,000,000 kWh, Product A's share would be 100,000 kWh.
  
  2. Choose how to report it
  
  Option 1: For total product emissions
  - Keep the allocated facility inuts (100,000 kWh).
  - Set your declared unit as total production (100 tonnes).
  
  Option 2: For per-unit emissions
  - Find how many units you produce.
  - Example: If 1 unit = 1 tonne, hen you make 100 units.
  - Divide your allocated inputs by units (100,000 kWh ÷ 100 = 1,000 kWh per unit).
  
  Remember:

  - Always use the same allocation method (mass or economic) determined by the PACT decision tree.
  - Document everything for your reference: your chosen allocation method, total facility production, product percentages, and all calculations and assumptions.
  - Try to get product-specific data where possible - this method is a backup option.